A sharp rise in the cost of biodegradable bags is impacting small businesses in Tamil Nadu, attributed to global geopolitical tensions and increasing input expenses. The spike is linked to the recent surge in international crude oil prices, influenced by tensions between the United States and Iran, affecting industries reliant on petroleum-based inputs, including the biodegradable packaging sector. Despite being promoted as eco-friendly options crafted from materials like cornstarch, PLA, and PBAT, biodegradable bags still require crude oil derivatives in their production, rendering them vulnerable to fluctuations in global oil prices.
Industry sources reveal that 20 to 30 percent of the raw materials used in biodegradable bag production are tied to crude oil derivatives. With a recent 20 to 30 percent rise in global crude prices, manufacturing costs have significantly increased. The manufacturing cost for one kilogram of biodegradable bags has surged from approximately Rs 127 to Rs 170, leading to a market price escalation from around Rs 150 per kg to nearly Rs 250 per kg, creating financial strain for suppliers and consumers alike.
The price hike is already impacting retail operations, with small traders, who had transitioned to biodegradable options due to plastic use restrictions, now compelled to limit usage to manage costs. A shop owner in Chennai’s Parrys Corner mentioned that they now offer biodegradable bags only for purchases exceeding Rs 100, shifting to paper covers for smaller transactions, reflecting a trend among small retailers. While biodegradable bags were seen as a sustainable substitute for plastic, the current cost increase poses a challenge to their widespread adoption, especially among small-scale sellers.
Experts warn that without stabilization in raw material costs or policy interventions, the momentum towards environmentally friendly packaging could suffer setbacks, potentially leading businesses to revert to cheaper alternatives despite environmental considerations.
